Agenda - Council - 11/25/1980 - Laserfiche WebLink

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- 26 - IV. FINANCING AND PROGRAM COSTS This section discusses market conditions affecting secondary materials, abatement program costs, methods of obtaining financing to develop abate- ment programs and facilities, and economic incentives that could encourage private sector participation in abatement projects. A. MARKET CONDITIONS MATERIALS MARKETS Prices for recyclable materials are determined Dy the laws of supply and demand in the marketplace. Historically and currently, the markets for recoverable materials have shown considerable fluctuation. The wide swings of the price pendulum can be attributed to a number of outslde forces. Some of these are supply and demand for specific materials by specific industries; strikes in virgin materials industries; governmental influence through tax or price incentives and product specifications; and foreign purchases of recovered materials. Energy economics and demand for virgin materials have profound influences on secondary materials markets. Geographic location of markets also plays a key role in materials recovery economics because of transportation costs. In general, however, markets for recoverable materials have shown an upward trend similar to that of most other commodities. (HDR, 1975) Since 1971, secondary ferrous metals, newsprint and corrugated con- tainers have experienced dramatic fluctuations in price (Minnesota Resource Recovery Plan, 1979). Though not as pronounced, price changes for secondary aluminum have also occurred over the same period. In contrast, prices for glass culler have experienced a steadier trend--generally upward--since 1971. Forecasting future market developments for any product is diffi- cult, and this is especially true for the volatile market for recovered materials. All of the secondary materials markets are keyed to the natlonal economy, as are most markets. Recycled or recovered materials are more affected by aberrations in economy because they are generally substitute or supplementary goods--used mainly when demand for the finished product is so high that the sdpply of virgin materials cannot keep pace. Consequently, when the economy suffers a down turn, recovered materials are the first supply source to be cut back. According to industry spokesmen, the 10-year forecast is good for all recovered materials, especially ferrous metal and aluminum in the Midwest market. There wlll be periodic fluctuations, but major expansions of electric steel furnaces in steel companies located along the Mississippi River indicate a continued strong demand for recovered ferrous. The aluminum industry is opening new recycling operations and making a major expansion in the field. Thus, the future aluminum market seems fairly secure as well. Glass and paper markets totally depend on local conditions (Minnesota Resource Recovery Plan, 1979).